We need to start treating our businesses properly, celebrating their success
and start taking every opportunity to support them and help them grow, says Adam
Afriyie

The UK is a global business centre. It’s a hive of creativity and entrepreneurial activity. According to the Office for National Statistics (ONS), self-employment is becoming even more popular: between 2008 and 2012, an extra 367,000 became self-employed. That means 4.2 million people in the UK work for themselves or run their own business.

But politicians, the Government and Whitehall have a problem with British businesses. We have a problem with British people who create wealth. Deep down, many of us just don’t like them. We want people to start businesses, but when they become successful we stop thinking of them as inspiring individuals who followed their dreams, and start thinking that they’re up to something.

Why does this happen? Why do we celebrate the start-up business, hold up the young entrepreneur as a paragon of virtue, but put barriers to growth in the way of the mid-size and larger company? And equally, why do we sneer at multinationals that take their accountants’ advice and pay the minimum legal amount of tax. Businesses are, after all, supposed to make a profit. They have their own responsibilities. Employees should expect good wages and bonuses if things are going well. Shareholders – many of whom look after people’s pensions – expect a return on investment. British businesses aren’t created for the sole purpose of handing cash to the taxman. Profits are reinvested, creating new jobs, or distributed to shareholders, boosting pensions and increasing demand for goods and services, thereby creating even more jobs.

I believe we need to reassess our relationship with business. We need to knock down the barriers to growth, simplify the tax system, implement obvious, sensible policies and take every opportunity to cut red tape and create incentives for international businesses to come to the UK. Perhaps more importantly, we need to take a long hard look at why we feel compelled to beat up the only people who can get us out of our present economic hole. We need to build a new, positive, more productive, 21st century relationship with business in the UK.

Businesses create wealth. But that’s only the headline. You need to unpack how they do it to see quite how important they really are. At a very basic level, we often forget that businesses are real people – employees and employers working together towards a common aim. It doesn’t matter if they are a global conglomerate or a tiny SME. They are people working towards a set of common goals: to build a successful business in order to provide for themselves and their families; to build a sustainable career; to become better off; to have the money to buy things from other businesses; and perhaps to start their own businesses. They create wealth through success. The more successful they become the more people they employ and the more tax they pay. The more tax they pay the more they contribute to our wider society; to schools and hospitals, to our own and our parents’ pensions, to state benefits, to infrastructure – and to their own local neighbourhoods.

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Not all businesses are ‘good’. I’m well aware that there are businesses that do not treat their staff as well as they could. A thriving jobs market will enable these employees to choose a better job. There are also businesses out there who are a down right disgrace. These businesses must be dealt with by prosecuting where there is criminal activity.

So what can the Government do to help businesses, and employees, increase their ability to create wealth, and help them to help us solve our own economic problems? This month, George Osborne will deliver the Budget. Since 2010, despite the constraints of coalition, there has been clear economic progress. The deficit has been cut. The private sector has created one million new jobs. Income tax has been cut for 24 million people. But we need growth. And we need it now. Businesses are the only ones who can help us grow and build a new future for the UK. So they should be our priority. And we must use the tax system to support them to create wealth.

Years of tinkering round the edges have left us with an absurd, horrendously complicated tax system that actually penalises wealth creation, imposes high rates of tax on success and deters businesses from hiring new staff. We must move quickly to a lower, flatter and simpler tax regime if we are to give the least well-off the jobs, incentives and increased incomes they desperately need to get on in life. The desire to create wealth, reduce tax and maximise family income is a natural instinct, and it is exactly what is needed to kick-start the economy. We should introduce plans to gradually abolish the bizarre tax on jobs called employers’ national insurance. New jobs are needed to secure the economic recovery. Why then retain a nonsensical tax on jobs?

The Conservative-led Government has managed to do a reasonable job of reducing business taxes. Corporation tax rates have fallen. The signal to investors and wealth creators at home and abroad is a positive one. But we must do more. We need to make Britain the first-choice place to invest. We must accelerate the corporation tax cuts to 20 per cent and aim towards the Irish rate of 12.5 per cent to make Britain the most attractive place in Europe to do business. But we need short-term measures too. A temporary reduction in capital gains tax on business investments would immediately open the floodgates for UK and global investment into Britain, and rapidly increase the number of new jobs, at no medium-term cost to the Exchequer.

The Coalition has made a great start by raising the individual tax allowance. I believe that now is the time to move briskly towards the £10,000 target and plan to move beyond it. It makes sound economic and social sense: raising the allowance again will allow people to keep even more of their money, incentivise work and give people more freedom to make decisions for themselves and their families.

In addition, we need to implement some of the simple, sensible business policies that we’ve been ignoring for years. Take electronic invoicing. Why do British public services still expect businesses to send invoices in hard-copy form? To print out a sheet of paper, put it in an envelope, march down to the post office and buy a stamp – or even just printing out a stamp in the office; it slows down the whole process of getting paid for the work you’ve already done. It’s quite ridiculous. An antiquated system that must end right now.

Blanket adoption of e-invoicing in the public sector will save taxpayers billions each year and make a very real contribution to economic growth. Extrapolated figures from the European Banking Association and European Commission, and a report published by Ricoh UK, indicate that it would save up to £6 billion per year and adoption in the wider economy could save about £12 billion each year. This is a significant saving for millions of British taxpayers. E-invoicing in government will cut costs and bureaucratic hurdles for businesses. Invoices will be paid faster, freeing up vital capital for investment – money that would otherwise need to be borrowed by business at high rates of interest.

These bold, straightforward proposals will signal our intent to start learning to love our wealth creators. We need our businesses. And we need to start treating them properly, celebrating their success, shouting about how proud we are of their achievements and start taking every opportunity to support them and help them grow.